Fonterra and Nestlé Make Changes to Latin America JV

04 Aug 2014 --- Fonterra and Nestlé are reported to have made the first changes to their corporate alliance in Latin America. The two companies have revised their Dairy Partners Americas (DPA) joint venture (JV) to ‘better reflect each company’s respective strategies.’

The JV was founded in 2003 as a 50:50 partnership to manufacture milk powder and also chilled and liquid dairy products throughout the Latin America region. The likelihood of changes to this plan was announced in May this year.

As part of the JV, the two opened a $45m dairy distribution centre in Brazil last year. 

The changes made as part of the initial realignment strategy mean that Fonterra now has a 51% controlling stake in DPA Brazil, with Nestlé holding the balance; and, together with a local partner, Fonterra has taken over Nestlé’s share of DPA Venezuela.

In addition, Nestlé will now take control of DPA Ecuador, and the DPA milk powder manufacturing business. 

Fonterra is reported to have made $3.5bn in revenue each year from its Latin American business, which includes consumer dairy, food service and dairy ingredients.

Alex Turnbull, Fonterra’s Latin America md, said the changes to the JV will “further drive our volume and value growth strategy focusing on everyday nutrition offerings.”

“This is an exciting next step for Fonterra and the people in these businesses as they are formally welcomed to the Co-operative,” he said. 

“We are looking forward to continuing our strong relationship with Nestlé, while giving us the opportunity to further drive our volume and value growth strategy focusing on everyday nutrition offerings.”

“The changes we have made are aimed at making our businesses in Brazil and Venezuela even stronger.”

The other changes to the DPA alliance including Nestlé taking control of DPA Ecuador and the DPA milk powder manufacturing businesses, are still subject to regulatory approval and due to be completed by the end of the year.